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Updating Accounting and Auditing Legislation Restructuring the NBAA and establishing ICPAT.

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Presentation on theme: "Updating Accounting and Auditing Legislation Restructuring the NBAA and establishing ICPAT."— Presentation transcript:

1 Updating Accounting and Auditing Legislation Restructuring the NBAA and establishing ICPAT

2 2 Agenda  Project Background and Objectives  Approach and Methodology  NBAA/TAA (ICPAT)  Financial Reporting Act  Discussion

3 3 Project Background and Objectives (a) ROSC (April 2005) (b) Stakeholders’ Workshop (March 2006) (c) Project Implementation (August 2006)

4 4 Project Background and Objectives Improve statutory framework Strengthen enforcement mechanisms Upgrade professional education and training Enhance capacity of regulatory and professional bodies

5 5 Project Background and Objectives Raises the status of the profession in Tanzania and internationally Increases the flow of well qualified accountants Supports economic and business development

6 6 Approach and Methodology Extensive consultation with stakeholders Safeguard existing strengths e.g. examinations Consider international/regional practice Design NBAA and ICPAT structure (separation of government and private sector) Draft a Financial Reporting Act Workshop

7 7 NBAA and TAA (ICPAT) NBAA today: Regulator Professional members’ body Strong examination system Highly respected Board dominated by accountants

8 8 NBAA and TAA (ICPAT) TAA: Members’ association Little incentive for qualified accountants to join Limited resources No real disciplinary powers Participation by senior well respected professional accountants

9 9 NBAA and TAA (ICPAT) What is needed?  Need to separate roles and responsibilities of a regulator from those of a professional members’ body  Develop and strengthen NBAA as a regulator with public interest oversight functions  Establish a new stronger professional body using the experience in TAA

10 10 NBAA NBAA to be restructured: Membership functions passed to the new professional body Technical regulatory departments set up Examinations retained

11 11 NBAA New NBAA technical regulatory departments: (i) Standards Setting (ii) Monitoring (iii) Audit Review (iv) Enforcement (v) Education (already there)

12 12 NBAA Reconstituted NBAA Governing Board e.g. (i) 9-12 members (ii) Chairman (iii) Ex-officio members (6) (iv) Academic member (1) (v) Representatives of the accountancy profession--- expert members (1-2) (vi) Eminent members (1-2)

13 13 NBAA (vi) Maximum of 3 qualified accountants (apart from ex-officio members) (vii) CEO and Heads of Technical Departments to attend meetings

14 14 NBAA The NBAA will act in the public interest as a regulator of accountants and auditors in Tanzania to ensure integrity, best practice and compliance with international standards in the preparation of financial statements and the audit of those statements.

15 15 Public Interest Entity First Schedule of the Act: (a) Listed companies (b) Banks and financial institutions (c) Insurance companies (d) Any entity with an annual revenue that exceeds an amount to be determined by the Board

16 16 Public Interest Entity (e) Any entity that meets any two of the following as determined by the Board: Revenue less than (d) Number of employees Total assets Total liabilities (excluding shareholders’ equity)

17 17 Public Interest Entity (f) Per Second Schedule any Public Corporation or NGO that meets the criteria set out in (d) or (e)

18 18 NBAA Regulatory functions include: Register PIEs Register auditors of PIEs Undertake practice review of audit firms Standards setting and monitoring Accredit professional bodies

19 19 ICPAT The draft Financial Reporting Act (FRA) establishes a strong professional body for accountants and auditors: “The Institute of Certified Public Accountants of Tanzania”

20 20 ICPAT As a members’ body ICPAT will represent the interests of its members and, in particular: Register members and students Determine practical training requirements Issue certificates for public practice

21 21 ICPAT Establish disciplinary procedures CPE/professional development Technical guidance Ensure high standards of professional and ethical conduct Eventually IFAC membership

22 22 NBAA Funding NBAA will receive income from (a) the Ministry of Finance (b) auditors of PIEs registration fees (c) PIE registration fees (d) Examination fees (e) Publications

23 23 ICPAT Funding ICPAT will receive income from: (a) Membership fees (b) CPE (c) Set up costs from World Bank/Ministry of Finance

24 24 FRA FRA is divided into the following main parts: NBAA Registration of Auditors ICPAT Professional Accountancy Bodies Setting of Standards and Monitoring Miscellaneous provisions

25 25 FRA Composition of the NBAA Board: (a) Chairman (b) Six ex-officio members (Regulatory Members) (c) Academic member (d) Expert member (max.2) (e) Eminent member (max.2)

26 26 FRA Objectives, functions and powers of the NBAA: S12 sets out the objectives S13 sets out the functions S14 sets out the powers

27 27 FRA The Technical Departments will have several functions (S20) including: (a) Standards Setting Develop and adopt accounting/auditing standards after consultation with ICPAT Issue guidelines Ensure consistency with IFRS/IAS and ISA Standards for SMEs

28 28 FRA (b) Monitoring Review and analyse financial reports Identify any failures of compliance Monitor compliance with CPA employment rules Report to the Enforcement Department

29 29 FRA (c) Audit Review Register PIEs and auditors of PIEs Conduct practice reviews Ensure auditor compliance with the Act Accredit and oversee professional bodies Report non-compliance to the Enforcement Department

30 30 FRA (d) Enforcement Review findings reported by other departments or directly to the Board by other Government Agencies Recommend the appropriate course of action/sanctions

31 31 FRA (e) Education Preparing syllabi All aspects of the examination process Accrediting/exempting training providers

32 32 FRA Enforcement Procedures: (a) Board Hearing Panel to hear objections from PIEs, auditors etc (b) The Panel confirms, amends or quashes the recommendations/findings of the Enforcement Department (c) Accounting and Auditing Appellate Tribunal to hear appeals from the Panel High Court Judge and 4 with demonstrated expertise

33 33 FRA Registration of Auditors: (a) To audit a PIE an auditor needs to be registered with NBAA (b) Need to register the audit firm with NBAA (c) NBAA will review quality assurance procedures of audit firms (d) Sanctions (e) Material Irregularities

34 34 FRA ICPAT: (a) Covered by S42-64 (b) Council S45-47 (c) Establishes a potentially strong professional body (d) Extensive objectives and functions set out in the Act (e) Registration, practical experience and disciplinary functions

35 35 FRA (f) Certification (g) CPE and training

36 36 FRA NBAA Oversight of Professional Bodies: (a) For accreditation by NBAA a professional body (including ICPAT) must demonstrate it is undertaking various activities in a satisfactory manner (S65) (b) NBAA has public oversight of professional bodies

37 37 FRA Setting of Standards and Monitoring: (a) IFRS/IAS for PIEs (b) SMEs (c) ISA (d) Compliance and Monitoring

38 38 FRA (e) Practice review of auditors (f) Powers of investigation (g) Sanctions possible against registered auditors, PIEs and their officers/directors

39 39 Transitional Provisions (a) Transfer of professional membership (b) Continuity in audit of PIEs (c) Continue audit practice (d) Standards apply to SMEs (e) SOEs deferred compliance (f) IFAC membership

40 40 Effect on other legislation S78 repeal of the Auditors and Accountants (Registration) Act, 1972 Recommendations to amend 25 other listed Acts

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